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Insurance

Insurance – Business Insurance Requirements

When a salon or barbershop is opening for business, there are a million things to get ready from purchasing stock to the fit-out of the premise. The last thing you are likely to be concerned with is arranging insurance. To make the process of selecting and obtaining the appropriate insurance cover easier, Rothbury Insurance, H&BNZ’s insurance partner, have outlined the various covers available and a brief explanation for each of them.

Material Damage Insurance – 

This is known also as Business Assets Insurance.

This cover protects your stock, fit-out, contents and equipment from sudden, unexpected incidents which harm or destroy your assets. Stock is valued at the price you purchase the goods not at the price you sell the goods. The figure required for insurance purposes is the highest value of the stock that you would have in the salon in any one month of the year. Beware of policies which say, for example, $1 million cover. At the time of claiming, the insurance company will want an inventory and proof of the actual worth of your stock/assets and will certainly not be paying out $1 million. If the actual value of your stock is significantly less than the limit of cover (e.g. $1 million), then you may be paying too much in premiums for the insurance product that you are receiving. Always keep an inventory of all your business assets, because, in the event of a claim, it will speed up the process of claiming.

Business Interruption

This is also referred to as Loss of Profits Insurance.

If your salon is closed or interrupted at any time because of fire, flood, arson or other sudden unexpected events, this policy will protect your profit and your ability to start trading again. It will pay wages and other fixed expenses which you have insured. As business interruption is not an expensive insurance, it pays to be accurate with the business figures that you provide to the insurer in order to calculate the amount of insurance cover provided. To claim for business interruption insurance there has to be a claim against your business assets. The exception to this is in the extensions to the policy wording. It is very important that the cover includes a power interruption or public utilities being switched off. It also must include road closure and prevention of access to the salon.

Salon Liability Package

This liability package has been especially written for the H&BNZ because about 10 years ago we realised that while ACC covers a client for absolute fault from an accident caused by your salon and subsequent accident from a treatment given by your salon, it does not cover your client for the first week’s salary and only pays out 80% of the salary. This means that a client can issue civil court proceedings against a salon owner seeking compensation for distress and lost earning caused by the salon owner’s alleged negligence. Below is a brief summary of the different types of insurance cover that are available and how they might be useful to you.

1.  Public Liability

This covers the salon and salon owner against legal liability for unexpected and unintended damage to property or bodily injury to third parties. An example would be a tap being left on and water seeping into a neighbouring building and damaging the other party’s flooring. Always ensure that any tradesmen you have working in your premises have their own public liability insurance.

2. Punitive and Exemplary Damages

This covers claims made by or on behalf of a person who is not your employee, who has suffered personal injury resulting from something which happened in connection with the business of the salon. (Claims under this cover are made by people who believe the salon should be punished by the Court for outrageous conduct. Such claims are over and above cover provided by ACC or your Public Liability policy.)

3. Employers Liability

This covers the cost of defending claims by an employee against the employer where negligence is alleged or Breach of Duty causing injury or illness, where ACC cover is not available to the employee. It also covers awards made against the employer in respect of compensation.

4. Statutory Liability

This covers the cost of defending legal claims and any defence related expenses where any member of the public accuses the salon of a breach of any Act of Parliament in force at the time of claiming.

5. Professional Indemnity

This insures the Salon against loss resulting from claims made against the Salon which arise from an alleged breach of professional duty. This policy covers the legal costs and any compensation awarded in the event of proven harm to a person, caused by negligent conduct, breach of professional/trade standards, defamation, or disparaging comments/material.

6. Business Accident and Sickness

This insures your key person/s for their wages in the event they cannot work for up to 52 weeks because of sickness or injury. The waiting period for being paid is 7 days for sickness and immediately for an accident. The money is paid out tax free as it is not a life product. This product is unique in the market place. It covers hairdressers up to age 65 and the premiums are part of the group package.

How to claim in the event of an Accident/Incident 

(only if you have taken out an insurance policy):

  1. Ring the H&BNZ’s Insurance Partner, Rothbury.
  2. Most policies have excesses. If the claim is lower than the amount of the excess, for example $500, then there is no claim.
  3. In the event of a possible liability claim, you must inform Rothbury immediately. It is usually too late once you receive a legal letter or a request to attend court.
  4. Once you receive the claim form, please attach the inventory or proof of ownership of items damaged, destroyed or stolen.
  5. In some cases, an assessor will be appointed by the insurance company. Give all assistance to the assessor who is there to finalise your claim and arrange payout.
  6. If you are leasing your salon building, have a copy of your lease which will show who is responsible for damage to the building/glass/floors. The usual rule is that if you have done the fit-out of the building, then you own the fit-out and your insurance will reimburse you for damage.
  7. It is important to have on file or on the client’s card, proof that you have noted any allergies or instructions advised to the salon.
  8. It is the policy in some salons that if a client is not happy with the service given then a refund or discounted treatment is provided. As long as no liability is admitted, this is a personal choice.
  9. In the event of a break-in, if possible, photograph any damage before cleaning up the area.
  10. As with personal claims, it is the insured’s responsibility to take reasonable care and minimise the risk. For example, in the event of a power failure, if there is a cell phone on the premises, it would be minimising the risk to notify your clients and rebook appointments. If this is not possible and not all clients can rebook appointments or you are too busy, then the amount of sales lost will be reimbursed. Your policy should have no excess on Business Interruption claims.
  11. Please keep receipts for any purchases of assets or stock for the business as this proves your ownership.
  12. In the event of a vexatious client, take notes of any conversation and/or action you have taken and the date of the event being complained about – lawyers love seeing a client paper trail!